Horn v. Cushman & Wakefield Western, Inc.

Facts

Stanford Horn was hired in June 1990, at age 55, by Cushman & Wakefield Western, Inc. (C&W), a commercial real estate company, as regional communications manager for the western region. He came with 21 years at Coldwell Banker as director of public relations and corporate communications, earlier stints in newspaper marketing and radio advertising, a California real estate license, and a master’s degree in journalism. (Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 802.) He was hired by regional president John Renard and reported directly to him; although Horn disputed that Renard alone hired him, the court found “the undisputed evidence establishes that Renard hired Horn.” (Id. at p. 802, fn. 2.) Horn’s performance evaluations — all written by Renard — were positive: three of four rated him “exceeds expectations,” though the same evaluations urged that he “be more creative and more assertive in his dealings” and “exhibit greater initiative through active participation in challenging assignments.” He received numerous commendations, and the San Francisco Examiner described his press relations as “the most professional approach to real estate public relations in California.” (Id. at p. 803.)

In 1994 C&W undertook a company-wide reorganization from a branch-office concept to a market-area concept, designed to make the company more client-responsive; 10 to 12 members of the management team were terminated. Beginning in January 1994 Horn also reported indirectly to Barbara Van Allen, C&W’s newly hired national communications director in New York. (Horn, supra, 72 Cal.App.4th at p. 803.) In October 1994, after Horn circulated an approved news release about the reorganization, a local business newspaper ran a story using phrases such as “blood flows in the hallways at Cushman and Wakefield.” Horn sent the story to Van Allen by overnight courier; she heard about it from a superior before it arrived and, when Horn explained the courier, replied: “this is 1994, haven’t you ever heard of a fax before?” (Ibid.)

Consistent with the reorganization, Renard decided to restructure the regional communications manager position “by changing the position’s focus from internal communications to external communications and public relations.” He considered Horn for the restructured role but concluded his skills were not the most suitable — Horn was more of a “technician” than a “salesman.” In Renard’s words: “Stan did a job which met expectations, sometimes exceeded expectations, but we had a different vision going forward, and we were looking for somebody who was really going to stand out in that particular area, and Stan very candidly never stood out as an outstanding marketing individual.” Renard did not ask Horn about his marketing and sales experience. (Horn, supra, 72 Cal.App.4th at p. 804.) In the 60 to 90 days before the termination, Renard and Van Allen discussed Horn’s performance on three to ten occasions — his “lack of urgency,” “lack of a strategic focus,” and “lack of sensitivity to the marketplace.” Renard sought Van Allen’s input “but he made the decision himself. Van Allen concurred.” (Ibid.)

On December 5, 1994, Renard informed Horn he was terminated effective January 31, 1995, explaining, with reference to a human resources memo, that the termination resulted from changes occurring in the company and the reorganization of the position’s functions. Horn responded, “It’s been a good five-year run.” Horn was 59; Renard was 56 when he made the decision. (Horn, supra, 72 Cal.App.4th at p. 804.) C&W interviewed roughly ten candidates and, on August 1, 1995, hired 38-year-old Gary Marsh, who had two years’ recent experience as a reporter covering real estate and nearly seven years’ experience in sales and marketing. (Ibid.)

Procedural history

Horn sued C&W on February 13, 1996, for age discrimination in employment, breach of an implied contract to terminate only for good cause, and breach of the covenant of good faith and fair dealing. After discovery, C&W moved for summary judgment. At the June 5, 1997 hearing the trial court adopted its tentative ruling for C&W on the contract-based claims and took the age claim under submission; on June 10, 1997, it granted the motion, “finding no evidence to suggest Horn’s termination was motivated by age animus or that C&W’s reason for terminating him was pretextual.” Judgment of dismissal was entered August 7, 1997, and Horn appealed. (Horn, supra, 72 Cal.App.4th at p. 802.) Division Two affirmed in an opinion by Presiding Justice Kline, ordered published June 1, 1999; the Supreme Court denied review on July 28, 1999. (Id. at p. 820 and print header.)

Issue

Three questions framed the appeal: (1) whether the trial court impermissibly weighed the evidence; (2) whether Horn “produced sufficient evidence which would have allowed a jury to infer the reasons given by C&W for his discharge were pretextual”; and (3) whether summary judgment was proper on the implied-contract and implied-covenant claims. (Horn, supra, 72 Cal.App.4th at pp. 801–802.) Embedded in the second question was the doctrinal issue on which Horn became a leading authority: exactly what quantum and kind of evidence must an employee produce, once the employer proffers a legitimate nondiscriminatory reason, to earn a trial on pretext?

Holding

Reasoning

The framework: McDonnell Douglas on summary judgment, and a split resolved. The court began with the summary judgment statute: a defendant bears the initial burden of showing the “cause of action has no merit,” after which the burden shifts to the plaintiff to show a triable issue. (Horn, supra, 72 Cal.App.4th at p. 805, citing Code Civ. Proc., § 437c, subds. (a), (o)(2), and Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1730–1731.) Review is de novo; the opposing party’s evidence and reasonable inferences are accepted as true; but the plaintiff “must show ‘specific facts,’” not rest on pleadings. (Horn, at p. 805.) A FEHA discrimination plaintiff “must be able to survive the burden-shifting analysis” of McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, applied on summary judgment so that “the judge [will] determine whether the litigants have created an issue of fact to be decided by the jury.” (Horn, at pp. 805–806, quoting Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 255, fn. 8.) The court acknowledged that California courts “have disagreed upon the exact showing required” of an employee facing an employer’s legitimate-reason evidence — a disagreement rooted in the “somewhat contradictory language” of St. Mary’s Honor Center v. Hicks (1993) 509 U.S. 502 — and resolved it by adopting Hersant‘s intermediate, “predominant view” requiring substantial evidence of falsity, or evidence of animus, or a combination. (Horn, at pp. 806–807 and fn. 4.)

What pretext is not: error, unwisdom, or disbelief. The court stressed that the employee cannot “simply show the employer’s decision was wrong, mistaken, or unwise.” Rather, he “‘must demonstrate such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer’s proffered legitimate reasons for its action that a reasonable factfinder could rationally find them “unworthy of credence,” [citation], and hence infer “that the employer did not act for the [. . . asserted] non-discriminatory reasons.”‘” (Horn, supra, 72 Cal.App.4th at p. 807, quoting Hersant, supra, 57 Cal.App.4th at p. 1005.) Once C&W produced substantial evidence of a legitimate reason — the restructuring and Renard’s judgment that Horn was not the best fit — the presumption of discrimination “simply drops out of the picture,” and Horn had to “produce ‘substantial responsive evidence’ that the employer’s showing was untrue or pretextual.” (Id. at p. 807, quoting Hicks, supra, 509 U.S. at p. 511, and Martin, supra, 29 Cal.App.4th at p. 1735.) He had to “do more than establish a prima facie case and deny the credibility of the [defendant’s] witnesses,” and produce “specific, substantial evidence of pretext.” (Ibid., quoting Bradley v. Harcourt, Brace and Co. (9th Cir. 1996) 104 F.3d 267, 270.) “We emphasize that an issue of fact can only be created by a conflict of evidence. It is not created by speculation or conjecture.” (Ibid.)

Identifying the decisionmaker — and why it mattered twice. Horn’s theory that Van Allen was “the actual force behind his termination” and harbored age animus was “entirely speculative”: Renard testified unequivocally that he made the restructuring and termination decisions, seeking Van Allen’s input, and Horn had only “dotted line” reporting responsibility to her. (Horn, supra, 72 Cal.App.4th at pp. 808–809.) The identity of the decisionmaker was doubly consequential. First, the same-actor inference: “‘. . . where the same actor is responsible for both the hiring and the firing of a discrimination plaintiff, and both actions occur within a short period of time, a strong inference arises that there was no discriminatory motive.’” (Id. at p. 809, quoting Bradley, supra, 104 F.3d at pp. 270–271.) Quoting the Fourth Circuit, the court reasoned that “‘[i]t hardly makes sense to hire workers from a group one dislikes (thereby incurring the psychological costs of associating with them), only to fire them once they are on the job.’” (Ibid., quoting Proud v. Stone (4th Cir. 1991) 945 F.2d 796, 797.) Surveying federal authority applying the inference across spans up to seven and a half years, the court concluded “five years is a relatively short time and is not so long a time as to attenuate the presumption” — while acknowledging the presumption “is not irrebuttable.” (Id. at p. 809, fn. 7, and p. 810.) Second, the stray-remarks screen: because Van Allen did not make the decision, her “isolated remark to him concerning the fax machine (which appears highly ambiguous as far as discriminatory animus and which was not made in the context of Horn’s termination) was at most a ‘stray’ ageist remark and is entitled to virtually no weight in considering whether the firing was pretextual or whether the decisionmaker harbored discriminatory animus.” (Id. at p. 809.)

“Restructuring on paper” versus the focus of actual duties. Horn’s principal pretext theory was that the job was not in fact restructured: the written position descriptions before and after were “very similar,” with eight principal responsibilities in common. The court agreed with the trial court that “that the written position description does not change does not mean the employer has not restructured the job,” and framed the dispositive question as “whether the similarities of the job descriptions, together with other evidence presented by Horn, provides substantial evidence of pretext sufficient to overcome the strong inference of nondiscrimination raised by the same-actor presumption. We think not. As we explain hereafter, it is the focus of the actual job duties required, rather than the position description which is relevant.” (Horn, supra, 72 Cal.App.4th at p. 811.) The record showed the balance of duties “was dramatically changed after restructuring”: Horn’s own inventory of tasks — the company newsletter, executive writing, internal meetings, occasional feature stories — was predominantly internal, while Marsh’s week centered on pitching stories, buying media placements, and formulating advertising; the in-house periodical Horn had built, WestWords, was discontinued as part of the restructuring. (Id. at pp. 812–813.) The March 1995 newspaper ad for the position, with its emphasis on “spearhead[ing]” public relations and media contacts and its silence about internal communications, “if anything, lends support to C&W’s assertion the job had been refocused toward external communications.” (Id. at p. 812.)

“Ever-changing reasons” require substantive inconsistency, not different vocabulary. The court rejected Horn’s contention that C&W gave “ever-changing reasons” for the discharge: “C&W’s reasons have remained consistent.” (Horn, supra, 72 Cal.App.4th at p. 813.) Renard’s contemporaneous talking points tied the termination to the restructuring and the “need to focus on a strong external communications and public relations program”; his deposition explained the market-area reorganization and the search for “somebody with more marketing skills, sales ability in working with the brokers”; Van Allen described a position made “[m]ore of a strategic focus, more externally focused”; and defense counsel’s pre-litigation letter described the same refocusing. (Id. at pp. 813–814.) “The statements of Renard, Van Allen, and Pritikin contain the same central theme — that the responsibilities of the position were restructured to require greater focus on external communication and marketing concerns and that Horn was not viewed as being the strongest person for the task. . . . It is the substance of the reason provided, not the word choice, which is critical.” (Id. at p. 815.)

Self-assessment is not evidence; the decisionmaker may rely on firsthand observation. Horn argued that he was amply qualified for the restructured job — with a real estate license and years of marketing-adjacent experience — and that Renard’s failure even to ask about his sales background showed pretext. The court disagreed: “an employee’s subjective personal judgments of his or her competence alone do not raise a genuine issue of material fact” (Horn, supra, 72 Cal.App.4th at p. 816, citing Bradley, supra, 104 F.3d at p. 270), and “Renard’s firsthand observation of Horn’s performance for a period of four and one-half years furnished Renard with a sufficient basis to make these evaluations without inquiring into Horn’s previous experiences” (ibid.). Horn’s own deposition sealed the point: “I don’t consider myself to be a good salesman or a good broker.” (Ibid.) Nor could Horn survive by insisting that the case turned on his superiors’ state of mind: “The decisionmaker’s motive and state of mind will almost always be in dispute in such cases,” but the plaintiff “‘must do more than establish a prima facie case and deny the credibility of the [defendant’s] witnesses.’” (Id. at p. 817, quoting Wallis v. J.R. Simplot Co. (9th Cir. 1994) 26 F.3d 885, 890.)

The contract claims: at-will presumption unrebutted. On the implied-contract claim, C&W relied on Labor Code section 2922’s at-will presumption and its employee brochure stating that the employment relationship “may be terminated at the will of either party, unless there is a written agreement to the contrary.” (Horn, supra, 72 Cal.App.4th at p. 817.) Horn’s counter-evidence — regular merit raises, “exceeds expectations” reviews, and evaluation language calling him an “intellectually curious employee whom I feel has his best days of performance ahead of him at C&W” and one with “the necessary knowledge and capabilities of playing a key role in our future” — did not raise a triable issue. (Ibid.) Quoting at length from Kovatch v. California Casualty Management Co. (1998) 65 Cal.App.4th 1256, the court explained that positive reviews, commendations, raises, and vague assurances are “‘natural occurrences of an employee who remains with an employer for a substantial length of time’” and cannot alone establish an implied agreement limiting the right to terminate. (Id. at pp. 818–819.) And because Horn’s employment was at will, “he can state no claim either for breach of an employment contract or for breach of the implied covenant” of good faith and fair dealing. (Id. at pp. 819–820.)

Significance

Horn is among the most-cited California pretext decisions because it consolidated, in one opinion, nearly every doctrine an employer deploys on summary judgment: the Hersant “substantial evidence of untruth or animus” standard; the rule that disbelief, speculation, and credibility attacks are not evidence; the same-actor inference at “strong inference” strength, extended to a five-year interval; the stray-remarks discount for non-decisionmaker comments; the actual-duties (not job-description) test for restructuring; the substance-over-word-choice test for “shifting reasons”; and the discount of a plaintiff’s self-assessment of his own qualifications. Within a year, the Supreme Court’s decision in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317 embraced the same architecture for FEHA summary judgment, and Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826 supplied the general burden framework. Courts of Appeal repeatedly borrowed Horn‘s same-actor analysis — West v. Bechtel Corp. (2002) 96 Cal.App.4th 966 applied it with “particular force” to a one-month interval — and its “virtually no weight” treatment of isolated remarks became a defense staple.

Two subsequent developments define Horn‘s modern limits, and every practitioner should know them. First, in Reid v. Google, Inc. (2010) 50 Cal.4th 512, the California Supreme Court declined to adopt a categorical “stray remarks doctrine” that would strip ageist comments of all probative value merely because they came from non-decisionmakers or were unconnected to the decision; remarks must instead be weighed with all the evidence in context. Horn‘s discounting of the fax remark survives on its facts — a single, facially ambiguous comment by a non-decisionmaker — but its “virtually no weight” language cannot be applied mechanically after Reid. Second, the same-actor “presumption” language in Horn is best read carefully: the opinion itself concedes the inference “is not irrebuttable” (Horn, supra, 72 Cal.App.4th at p. 810), and later decisions treat it as an inference for the factfinder rather than a rule of law. What remains fully intact — and what makes Horn the defense bar’s favorite citation — is its core evidentiary demand: an opposition built on the plaintiff’s perception of his own performance, semantic differences among managers’ explanations, and suspicion of the employer’s motives does not add up to “substantial responsive evidence.” Decisions such as Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243 later pushed back against employer overuse of these doctrines, emphasizing that discrimination cases are often proved by circumstantial evidence and are frequently ill-suited to summary judgment — the doctrinal tension in which every California MSJ on pretext is now litigated.

Key quotes

“[T]o avoid summary judgment, an employee claiming discrimination must offer substantial evidence that the employer’s stated nondiscriminatory reason for the adverse action was untrue or pretextual, or evidence the employer acted with a discriminatory animus, or a combination of the two, such that a reasonable trier of fact could conclude the employer engaged in intentional discrimination.” (Horn, supra, 72 Cal.App.4th at pp. 806–807, quoting Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1004–1005.)

“We emphasize that an issue of fact can only be created by a conflict of evidence. It is not created by speculation or conjecture.” (Horn, supra, 72 Cal.App.4th at p. 807.)

“‘. . . where the same actor is responsible for both the hiring and the firing of a discrimination plaintiff, and both actions occur within a short period of time, a strong inference arises that there was no discriminatory motive.’” (Horn, supra, 72 Cal.App.4th at p. 809, quoting Bradley v. Harcourt, Brace and Co. (9th Cir. 1996) 104 F.3d 267, 270–271.)

“It is the substance of the reason provided, not the word choice, which is critical.” (Horn, supra, 72 Cal.App.4th at p. 815.)

Read the full opinion (Justia) →

Practice pointer

Open questions

Horn decided the “exact showing” question for its district by adopting Hersant‘s intermediate position, expressly noting that California courts had “disagreed upon the exact showing required by an employee to avoid summary judgment” in the wake of Hicks. (Horn, supra, 72 Cal.App.4th at p. 806 and fn. 4.) The Supreme Court’s subsequent decisions largely ratified that choice, but Horn left open the outer boundaries of its own devices. How long an interval attenuates the same-actor inference remains unresolved — the court held only that five years “is a relatively short time,” surveying federal cases reaching seven and a half years, and acknowledged the presumption is rebuttable without describing what rebuttal suffices. (Id. at p. 809, fn. 7, and p. 810.) The weight of remarks by participants who influence but do not make the decision was not squarely addressed: Van Allen had discussed Horn’s performance with Renard repeatedly in the weeks before the termination, yet her comment was discounted because “Van Allen did not make the decision” (id. at p. 809) — a line later cases about influence-based liability continue to probe. And because the parties conceded the prima facie case (id. at p. 807), Horn says nothing about what a reduction-in-force or restructuring plaintiff must show at step one. The court also declined to consider Horn’s late-raised theory that defense counsel’s pre-litigation letter was itself evidence of pretext, leaving unexamined when counsel’s characterizations may be used against the employer. (Id. at p. 815, fn. 10.)